Techcrunch Disrupt–The controversy & the event

If size matter, then TechCrunch Disrupt [TC Disrupt] wins the prize. With 2600 attendees, it is arguably the largest US-based tech industry conference. With 200 companies exhibiting–often for just one of three days–it often took on the characteristics of a trade show.

I just love the promise and excitement in young start-ups exploding with grand visions. While many of these visions will turn out to have been hallucinations, but others will be real and will disrupt something large and institutional who will disdain them until it is too late.

For companies showing the ability to disrupt this was just about the best show I’ve attended in more than 25 years in the tech industry.

That should be what this column is about, and it part it is. But the the conversation going in and coming out of this event was more directed at the drama and trauma that is Michael Arrington and his hand-picked TechCrunch team.

If you like controversy, well this one was juicier than crushed peaches in your pocket.

At the very core of it, of course, was Michael Arrington, the charismatic, controversial former lawyer, turned startup founder, turned TechCrunch founder turned angel investor. The fact that these serial entrepreneurial endeavors have overlapped are at the root of all this controversy.

TechCrunch covers startups. Arrington has long invested in them in the earliest phases and TechCrunch writes about them. While there have been some utterances of there being no conflict, no one seems to be able to recall an incident where an Arrington company has not been favorably covered in the TechCrunch newsletter that enjoys two million unique visits each month.

I have previously described Arrington as the Rupert Murdoch of our industry. Both have incredible power and influence over publications that reach mass audiences all over the world. Both influence investors and other media. Both have been called bullies, and in my view, for good reason. And most recently both have been called to rask for questionable ethical practices particularly the venerable New York Times.

For all these reasons, Arrington, like Murdoch, seems to make enemies by the truckload.

The week prior, usually is filled with editorial speculations on what new media and web-based apps and trends would be unveiled. Instead it was filled with fast-breaking news of Arrington’s abrupt and dramatic termination from AOL who had bought TechCrunch for $30 million last year, a deal that disrupted a prior Disrupt event.

Each of these incidents seem to me to be a distraction. Journalists are taught in 101 courses never to get in the way of your story. Yet Arrington seems to be a persistant roadblock of his own production, this time featuring 200 very promising companies exhibiting and 30 presenting on the stage; 2600 people gathered in the vast, dark San Francisco Design Center and tens of thousands more watching the livestream worldwide.

TechCrunch was born in controversy. Arrington and erstwhile founding

partner Jason Calacanis, had attended a DEMO conference. DEMO has been around for 21 years and was a consistent success, until Arrington and Calacanis–sitting at a bar at the DEMO conference–announced they would start Disrupt to directly compete with the well-established IDG production. By no coincidence, would be held on the same dates as a future DEMO.

Calacanis had previously started two tech news organizations. He sold Silicon Alley Reporter to Murdoch’s Dow Jones Company , which promptly bungled it to death. Then Calacanis sold founded the controversy-loving Engadget, which he sold to AOL who has done rather well with it.

At last year’s San Francisco Disrupt event, Calacanis suddenly disappeared. Arrington went on the dais to announce the couple had gotten a surprise divorce. A court will decide the terms of desolution in a saga that may take a few years and mud wrestling matches to resolve.

Calacanis has since started his own product-intro conference, Launch, which has a similar format and was held in March in the same SF Design Center. Calacanis has announced plans to start a newsletter of its own and few doubt it will compete against TechCrunch.

So, it seemed to me that TechCrunch’s brief history had already become steeped in controversy going into this fall edition. For the 200 companies who hope to build awareness and win customers by strutting their stuff on the stage or in the exhibition hallways, there was some hope that this yer, unlike previous years, there might be some hope that the spotlight would remain on them, without the eruption of a sideshow that would diminish and divert focus.

But then it hit the fan.

This year’s trauma eclipsed all the traumas that have come before it. A while back, Arrington announced he was starting an early phase investment fund, calling it CrunchFund. This would mean that CrunchFund could invest in startups that TechCrunch would write about and who could also be stars in TechCrunch events such as Disrupt.

It wasn’t really anything all that new. Arrington has been investing in companies for years. Many have fared well at TechCrunch events–as have other companies in which he did not invest.

I was an early critic of this practice. Other newsletter impresarios of earlier years had gone into investing and immediately divested themselves of any editorial interests to avoid conflict or even the appearance of it. But back then I was hollering in a hurricane. Some people grumbled privately, but no one wanted to take on Arrington whose TechCrunch has proven to be a powerful bully pulpit a great many times.

And for the sake of my own transparency: Michael Arrington and I were once friends. We no longer are. We do not wish each other well. For precisely these reasons, I rarely cover his activities, and when I do, I try to give a balanced view, but advise you to keep in mind my personal perspective.

What had changed for Arrington was that he was no longer a private investor running a privately held company. He was employed by AOL, a publicly held and closely watched company struggling to make a comeback on ground it had previously lost. AOL, it was disclosed, was a major investor in the new CrunchFund.

On Sept. 1, 11 days before Disrupt, Arrington & AOL CEO Tim Armstrong. “TechCrunch is a different property and they have different standards… we have a traditional understanding of journalism with the exception of TechCrunch.”

There are many ways that TechCrunch could have been positioned at that point. It seems to me that Armstrong picked about the lamest approach. Other possible positioning was discussed by TechCrunch’s Paul Carr, who played much of the host role at this year’s conference and is clearly loyal to Arrington.

The response was instant and mostly negative. The lofty, New York Times, which in itself competes with AOL and TechCrunch in the media business hit hard to the negative side challenging the ethics of both Arrington and AOL.

Traveling through Brazil at the time, Arrington’s boss Ariana Huffington, no stranger to controversy herself,decided she couldn’t stand the heat so she threw Arrington out of the kitchen. She unceremoniously sacked Arrington.

And the saga of drama continued into the days immediately preceding the conference, there were all sorts of speculations: the TechCrunch team would resign en mass. Arrington would assemble them to start a new online media organization; Arrington would buy TechCrunch back from AOL; the whole thing was just a stunt to fan fires and grab attention.

Then came the conference. All seats were filled for many reasons. The opening remarks often set the tone for an entire conference. Their was mystery and speculation on who would deliver them and how the issue of Arrington would be folded into it.

Then, none other than Michael Arrington strode onto the dais.There were murmurs of surprise. He waited until the room became entirely still and then spoke for less than five minutes.

His tone was calm and his style was gracious. He explained that he was an AOL employee for four more days and he was on stage in that light. He talked of his life being filled with personal drama, and urged attendees to focus more on the 30 presenting companies as well as the other startups exhibiting in the StartUp Alley exhibition area.

In my view, it was one of his finest moments.

And for the most part, attendees abided by Arrington’s recommendation. While there was much talk on the controversy, most of the people I talked with were talking about the startups they represented or the ones they enjoyed.

The TechCrunch teams gets to see most industry companies in their earliest phases. They have a good eye for quality, for tech trends and yes companies with the potential of disrupting the status quo where disruption is much needed.

This year showed a couple of companies who promise to make healthcare issues easier for people. One of the Cake Health was a finalist. Another couple were making it easier for people to get organic food from local sources. One of them Farmigo, was a finalist and I’ll be writing about both of them in the future.

My personal favorite was a mobile app from Vocre of San Jose that lets you instantly translate via a mobile app in 13 languages. It won the people’s choice award and is available in beta for iPhone users.

There were at least 15 companies who were focused on small business. This was a pleasant surprise. I’ve long been a champion of social products for small business and this conference showed me that there’s a fast-forming trend to help small business with programs that are more sophisticated and useful than Facebook fan pages.

Also I was at the conference representing American Express Open Forum, and I found a wealth of material there for my columns in the form of some exceptionally fine companies.

Everyone–yes everyone–I spoke with said they were happy they attended and were getting as much or more than they had expected from the conference which filled the large and unfortunately dark San Francisco Design Center to it’s walls.

But elements of controversy seemed to pervade far too much:

The actual start ups presentations–the real stars of the show did not get to present until the closing hours of each day. Most of the primetime morning stage events were interviews with prominent VCs, many of them are apparently doing business with Arrington. The quality of these conversations and interviews was not bad–although the questions were often disappointingly softball.

The winner of TC Disrupt, which receives a $50,000 cash award, and the first runner up were both companies Arrington had invested in–it was disclosed.

Pressly, a presenting company with visually beautiful graphics for reading media content on a mobile device did a great presentation then got hammered by two judges who just happened, it turned out, to have investments in Flipbook an obvious competitor of Pressly.

Robert Scoble was banned from attending. Arrington had told him his crime was that he had favorably covered Calacanis Launch conference earlier in the year. Scoble held court in a small bar across the where many presenting companies went to be video interviewed by him. To bar presenting companies access to Scoble, one of the most influential voices on new technologies seemed to me to be particularly petty and unfair to entrepreneurs.

The Techcrunch team is clearly pissed that their leader has been taken out of the game. Little shots from the dais were fired at varying intervals for the three days. Arrington, was less gracious then earlier when he pointed out that Om Malik heads a newsletter, yet is part of an investment fund. In my view the comment did not help Arrington, but probably hurt Malik.

I started writing this with the intention of reviewing the conference. It seems I ended up with a very long piece reviewing the controversy. To that end, I would predict that Arrington will remain a powerful influence in the entrepreneurial side of technology for many years to come. He will survive unscathed in that light. But his baby has been taken from him.

In my view TechCrunch is better off. The ongoing sagas have started to distract from the fact that Arrington has assembled a high-quality team of journalists. Right now there’s apparent danger of defection and this would be a shame. The TechCrunch brand and Michael Arrington are not the same thing–as Arrington recently declared they were.

And it is now time for this publication to evolve into something new and perhaps stronger under whoever takes the reigns in coming weeks.